Table 1

Senior Loan Officer Opinion Survey on Bank Lending Practices
at Selected Large Banks
in the United States
1

(Status of policy as of October 2006)

Questions 1-6
ask
about commercial and industrial
(C&I) loans at your
bank. Questions 1-3 deal with changes in your bank's
lending policies over the past three months. Questions 4-5
deal with changes in demand for C&I loans over the past three
months. Question 6 asks about changes in prospective
demand for C&I loans at your bank, as indicated by the volume of
recent inquiries about the availability of new credit lines or
increases in existing lines. If your bank's lending policies have
not changed over the past three months, please report them as
unchanged even if the policies are either restrictive or
accommodative relative to longer-term norms. If your bank's policies
have tightened or eased over the past three months, please so report
them regardless of how they stand relative to longer-term norms.
Also, please report changes in enforcement of existing policies as
changes in policies.

1. Over the past three months, how have your bank's credit
standards for approving applications for C&I loans or credit
lines--other than those to be used to finance mergers and
acquisitions--to large and middle-market firms and to small firms
changed? (If your bank defines firm size differently from the
categories suggested below, please use your definitions and indicate
what they are.)

a. Standards for large and middle-market firms (annual sales of
$50 million or more):

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

0

0.0

0

0.0

0

0.0

Tightened somewhat

4

7.4

1

2.8

3

16.7

Remained basically unchanged

46

85.2

32

88.9

14

77.8

Eased somewhat

4

7.4

3

8.3

1

5.6

Eased considerably

0

0.0

0

0.0

0

0.0

Total

54

100.0

36

100.0

18

100.0

b. Standards for small firms (annual sales of less than $50
million):

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

0

0.0

0

0.0

0

0.0

Tightened somewhat

1

1.9

0

0.0

1

5.3

Remained basically unchanged

51

94.4

34

97.1

17

89.5

Eased somewhat

2

3.7

1

2.9

1

5.3

Eased considerably

0

0.0

0

0.0

0

0.0

Total

54

100.0

35

100.0

19

100.0

2. For applications for C&I loans or credit lines--other than
those to be used to finance mergers and acquisitions--from large
and middle-market firms and from small firms that your bank
currently is willing to approve, how have the terms of those loans
changed over the past three months? (Please assign each
term a number between 1 and 5 using the following scale: 1=tightened
considerably, 2=tightened somewhat, 3=remained basically unchanged,
4=eased somewhat, 5=eased considerably.)

a. Terms for large and middle-market firms (annual sales of $50
million or more):

3. If your bank has tightened or eased its credit standards or its
terms for C&I loans or credit lines over the past three months (as
described in questions 1 and 2), how important have been the
following possible reasons for the change? (Please respond to either
A, B, or both as appropriate and rate each
possible reason
using the following scale: 1=not important, 2=somewhat important,
3=very important.)

a. Possible reasons for tightening credit standards or loan terms:

All Respondents

Large Banks

Other Banks

Mean

Mean

Mean

Deterioration in your bank's current or expected capital
position

1.15

1.22

1.00

Less favorable or more uncertain economic outlook

1.85

1.78

2.00

Worsening of industry-specific problems (please specify
industries)

1.62

1.67

1.50

Less aggressive competition from other banks or nonbank lenders
(other financial intermediaries or the capital markets)

1.31

1.11

1.75

Reduced tolerance for risk

1.62

1.44

2.00

Decreased liquidity in the secondary market for these loans

1.15

1.11

1.25

Increase in defaults by borrowers in public debt markets

1.08

1.11

1.00

Other (please specify)

2.00

2.00

0.00

Number of banks responding

13

9

4

b. Possible reasons for easing credit standards or loan terms:

All Respondents

Large Banks

Other Banks

Mean

Mean

Mean

Improvement in your bank's current or expected capital position

1.04

1.06

1.00

More favorable or less uncertain economic outlook

1.24

1.28

1.14

Improvement in industry-specific problems (please specify
industries)

1.04

1.06

1.00

More aggressive competition from other banks or nonbank lenders
(other financial intermediaries or the capital markets)

2.76

2.72

2.86

Increased tolerance for risk

1.20

1.28

1.00

Increased liquidity in the secondary market for these loans

1.32

1.44

1.00

Reduction in defaults by borrowers in public debt markets

1.20

1.28

1.00

Other (please specify)

2.00

0.00

2.00

Number of banks responding

26

18

8

4. Apart from normal seasonal variation, how has demand for C&I loans
changed over the past three months? (Please consider only funds actually
disbursed as opposed to requests for new or increased lines of credit.)

a. Demand for C&I loans from large and middle-market firms (annual
sales of $50 million or more):

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Substantially stronger

0

0.0

0

0.0

0

0.0

Moderately stronger

8

14.5

6

16.7

2

10.5

About the same

37

67.3

22

61.1

15

78.9

Moderately weaker

9

16.4

7

19.4

2

10.5

Substantially weaker

1

1.8

1

2.8

0

0.0

Total

55

100.0

36

100.0

19

100.0

b. Demand for C&I loans from small firms (annual sales of less
than $50 million):

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Substantially stronger

0

0.0

0

0.0

0

0.0

Moderately stronger

6

11.1

4

11.4

2

10.5

About the same

35

64.8

21

60.0

14

73.7

Moderately weaker

13

24.1

10

28.6

3

15.8

Substantially weaker

0

0.0

0

0.0

0

0.0

Total

54

100.0

35

100.0

19

100.0

5. If demand for C&I loans has strengthened or weakened over the
past three months (as described in question 4), how
important have been the following possible reasons for the change?
(Please respond to either A, B, or both as appropriate and rate
each
possible reason using the following scale: 1=not
important, 2=somewhat important, 3=very important.)

Customer borrowing shifted from your bank to other bank or
nonbank credit sources because these other sources became more
attractive

1.53

1.33

2.33

Other (please specify)

3.00

3.00

0.00

Number of banks responding

15

12

3

6. At your bank, how has the number of inquiries from potential
business borrowers regarding the availability and terms of new
credit lines or increases in existing lines changed over the past
three months? (Please consider only inquiries for additional C&I
lines as opposed to the refinancing of existing loans.)

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

The number of inquiries has increased substantially

0

0.0

0

0.0

0

0.0

The number of inquiries has increased moderately

6

10.9

4

11.1

2

10.5

The number of inquiries has stayed about the same

37

67.3

23

63.9

14

73.7

The number of inquiries has decreased moderately

12

21.8

9

25.0

3

15.8

The number of inquiries has decreased substantially

0

0.0

0

0.0

0

0.0

Total

55

100.0

36

100.0

19

100.0

Merger and acquisition (M&A) activity in the
nonfinancial sector has boomed since 2005. Over the same period,
C&I loans on banks' books have also expanded rapidly. Questions 7-16
ask about the extent
to which the recent strength in C&I lending reflects the surge in
M&A activity.

7. About what share of the dollar volume of C&I loans currently on
your bank's books was originated for M&A-related purposes?
(M&A-related C&I loans include those made to finance leveraged
buyouts and other M&A activity.)

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Less than 5 percent

27

50.9

14

41.2

13

68.4

Between 5 percent and 10 percent

17

32.1

12

35.3

5

26.3

Between 11 percent and 20 percent

5

9.4

4

11.8

1

5.3

Between 21 percent and 30 percent

3

5.7

3

8.8

0

0.0

Between 31 percent and 40 percent

0

0.0

0

0.0

0

0.0

More than 40 percent

1

1.9

1

2.9

0

0.0

Total

53

100.0

34

100.0

19

100.0

8. How has the share of M&A-related C&I loans on your bank's
books (as reported in question 7) changed over the past
twelve months?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Increased substantially

1

1.9

1

2.9

0

0.0

Increased moderately

26

49.1

20

58.8

6

31.6

Remained basically unchanged

24

45.3

12

35.3

12

63.2

Decreased moderately

1

1.9

1

2.9

0

0.0

Decreased substantially

1

1.9

0

0.0

1

5.3

Total

53

100.0

34

100.0

19

100.0

9. If your bank has experienced an increase in the share of
M&A-related C&I loans over the past twelve months (as reported in
question 8), to what extent has the increase reflected a
shift of funding for M&A activity to banks as a result of a
reduction in the relative attractiveness of bond finance?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

To a substantial extent

0

0.0

0

0.0

0

0.0

To a moderate extent

10

35.7

9

42.9

1

14.3

To an insignificant extent or not at all

18

64.3

12

57.1

6

85.7

Total

28

100.0

21

100.0

7

100.0

10. If demand for C&I loans at your bank has been strengthened by a
shift of M&A financing out of the bond market (as described in
question 9), how important have been the following
possible reasons? (Please rate each
possible reason using
the following scale: 1=not important, 2=somewhat important, 3=very
important.)

All Respondents

Large Banks

Other Banks

Mean

Mean

Mean

Relatively more favorable pricing in the loan market

1.70

1.67

2.00

Relatively more favorable nonprice terms (including the maximum
size and maturity of loans or credit lines, loan covenants, and
collateralization requirements) in the loan market

1.90

1.89

2.00

Other (please specify)

2.25

2.25

0.00

Number of banks responding

10

9

1

11. About what share of the dollar volume of M&A-related C&I loans
currently on your bank's books was used to finance leveraged
buyouts?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Less than or equal to 10 percent

40

76.9

24

70.6

16

88.9

Between 11 percent and 20 percent

1

1.9

1

2.9

0

0.0

Between 21 percent and 30 percent

3

5.8

3

8.8

0

0.0

Between 31 percent and 50 percent

2

3.8

2

5.9

0

0.0

Between 51 percent and 75 percent

6

11.5

4

11.8

2

11.1

More than 75 percent

0

0.0

0

0.0

0

0.0

Total

52

100.0

34

100.0

18

100.0

12. About what share of the dollar volume of M&A-related C&I loans
currently on your bank's books is accounted for by ``bridge loans''
that your bank expects to be paid down with funds raised in capital
markets within the next twelve months?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Less than or equal to 10 percent

49

90.7

30

85.7

19

100.0

Between 11 percent and 20 percent

3

5.6

3

8.6

0

0.0

Between 21 percent and 30 percent

0

0.0

0

0.0

0

0.0

Between 31 percent and 50 percent

0

0.0

0

0.0

0

0.0

Between 51 percent and 75 percent

0

0.0

0

0.0

0

0.0

More than 75 percent

2

3.7

2

5.7

0

0.0

Total

54

100.0

35

100.0

19

100.0

13. How have your bank's credit standards for approving applications
for M&A-related C&I loans or credit lines changed over the past
twelve months?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

1

1.9

1

2.9

0

0.0

Tightened somewhat

9

17.3

6

17.1

3

17.6

Remained basically unchanged

39

75.0

26

74.3

13

76.5

Eased somewhat

3

5.8

2

5.7

1

5.9

Eased considerably

0

0.0

0

0.0

0

0.0

Total

52

100.0

35

100.0

17

100.0

14. For applications for M&A-related C&I loans or credit lines
that your bank currently is willing to approve, how have the terms
of those loans changed over the past twelve months? (Please assign
each
term a number between 1 and 5 using the following
scale: 1=tightened considerably, 2=tightened somewhat, 3=remained
basically unchanged, 4=eased somewhat, 5=eased considerably.)

15. What is your bank's outlook over the next twelve months for
delinquencies and chargeoffs on M&A-related
C&I loans
currently on your bank's books, assuming that economic activity
progresses in line with consensus forecasts?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Loan quality is likely to improve substantially

0

0.0

0

0.0

0

0.0

Loan quality is likely to improve somewhat

0

0.0

0

0.0

0

0.0

Loan quality is likely to stabilize around current levels

38

73.1

23

65.7

15

88.2

Loan quality is likely to deteriorate somewhat

13

25.0

11

31.4

2

11.8

Loan quality is likely to deteriorate substantially

1

1.9

1

2.9

0

0.0

Total

52

100.0

35

100.0

17

100.0

16. What is your bank's outlook over the next twelve months for
delinquencies and chargeoffs on C&I loans currently on your bank's
books that were not used to finance M&A activity
, assuming
that economic activity progresses in line with consensus forecasts?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Loan quality is likely to improve substantially

0

0.0

0

0.0

0

0.0

Loan quality is likely to improve somewhat

1

1.9

1

2.9

0

0.0

Loan quality is likely to stabilize around current levels

32

61.5

20

57.1

12

70.6

Loan quality is likely to deteriorate somewhat

19

36.5

14

40.0

5

29.4

Loan quality is likely to deteriorate substantially

0

0.0

0

0.0

0

0.0

Total

52

100.0

35

100.0

17

100.0

Questions 17-18
ask about commercial real estate loans
at your bank,
including construction and land development loans and loans secured
by nonfarm nonresidential real estate. Question 17 deals
with changes in your bank's standards over the last three months.
Question 18 deals with changes in demand. If your bank's
lending standards or terms have not changed over the relevant
period, please report them as unchanged even if they are either
restrictive or accommodative relative to longer-term norms. If your
bank's standards or terms have tightened or eased over the relevant
period, please so report them regardless of how they stand relative
to longer-term norms. Also, please report changes in enforcement of
existing standards as changes in standards.

17. Over the past three months, how have your bank's credit
standards for approving applications for commercial real estate
loans changed?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

1

1.8

0

0.0

1

5.3

Tightened somewhat

22

40.0

15

41.7

7

36.8

Remained basically unchanged

29

52.7

19

52.8

10

52.6

Eased somewhat

3

5.5

2

5.6

1

5.3

Eased considerably

0

0.0

0

0.0

0

0.0

Total

55

100.0

36

100.0

19

100.0

18. Apart from normal seasonal variation, how has demand for
commercial real estate loans changed over the past three months?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Substantially stronger

0

0.0

0

0.0

0

0.0

Moderately stronger

3

5.5

2

5.6

1

5.3

About the same

34

61.8

23

63.9

11

57.9

Moderately weaker

17

30.9

11

30.6

6

31.6

Substantially weaker

1

1.8

0

0.0

1

5.3

Total

55

100.0

36

100.0

19

100.0

Questions 19-20
ask about residential mortgage loans
at your bank.
Question 19 deals with changes in your bank's credit
standards over the past three months, and question 20 deals
with changes in demand over the same period. If your bank's credit
standards have not changed over the relevant period, please report
them as unchanged even if the standards are either restrictive or
accommodative relative to longer-term norms. If your bank's credit
standards have tightened or eased over the relevant period, please
so report them regardless of how they stand relative to longer-term
norms. Also, please report changes in enforcement of existing
standards as changes in standards.

19. Over the past three months, how have your bank's credit
standards for approving applications from individuals for mortgage
loans to purchase homes changed?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

0

0.0

0

0.0

0

0.0

Tightened somewhat

3

5.7

3

8.3

0

0.0

Remained basically unchanged

48

90.6

31

86.1

17

100.0

Eased somewhat

2

3.8

2

5.6

0

0.0

Eased considerably

0

0.0

0

0.0

0

0.0

Total

53

100.0

36

100.0

17

100.0

20. Apart from normal seasonal variation, how has demand from individuals
for mortgages to purchase homes changed over the past three months? (Please
consider only new originations as opposed to the refinancing of existing
mortgages.)

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Substantially stronger

0

0.0

0

0.0

0

0.0

Moderately stronger

1

1.9

1

2.8

0

0.0

About the same

19

35.8

10

27.8

9

52.9

Moderately weaker

30

56.6

22

61.1

8

47.1

Substantially weaker

3

5.7

3

8.3

0

0.0

Total

53

100.0

36

100.0

17

100.0

Questions 21-26
ask
about consumer lending
at your bank. Question
21 deals with changes in your bank's willingness to make
consumer loans over the past three months. Questions
22-25 deal with changes in credit standards and
loan terms over the same period. Question 26 deals with
changes in demand for consumer loans over the past three months. If
your bank's lending policies have not changed over the past three
months, please report them as unchanged even if the policies are
either restrictive or accommodative relative to longer-term norms.
If your bank's policies have tightened or eased over the past three
months, please so report them regardless of how they stand relative
to longer-term norms. Also, please report changes in enforcement of
existing policies as changes in policies.

21. Please indicate your bank's willingness to make consumer
installment loans now as opposed to three months ago.

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Much more willing

0

0.0

0

0.0

0

0.0

Somewhat more willing

2

3.8

2

5.9

0

0.0

About unchanged

50

94.3

31

91.2

19

100.0

Somewhat less willing

1

1.9

1

2.9

0

0.0

Much less willing

0

0.0

0

0.0

0

0.0

Total

53

100.0

34

100.0

19

100.0

22. Over the past three months, how have your bank's credit
standards for approving applications for credit cards from
individuals or households changed?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

0

0.0

0

0.0

0

0.0

Tightened somewhat

1

2.9

1

5.6

0

0.0

Remained basically unchanged

31

91.2

15

83.3

16

100.0

Eased somewhat

2

5.9

2

11.1

0

0.0

Eased considerably

0

0.0

0

0.0

0

0.0

Total

34

100.0

18

100.0

16

100.0

23. Over the past three months, how have your bank's credit
standards for approving applications for consumer loans other than
credit card loans changed?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Tightened considerably

0

0.0

0

0.0

0

0.0

Tightened somewhat

1

2.0

1

3.0

0

0.0

Remained basically unchanged

46

90.2

28

84.8

18

100.0

Eased somewhat

4

7.8

4

12.1

0

0.0

Eased considerably

0

0.0

0

0.0

0

0.0

Total

51

100.0

33

100.0

18

100.0

24. Over the past three months, how has your bank changed the
following terms and conditions on new or existing credit card
accounts for individuals or households? (Please assign each
term a number between 1 and 5 using the following scale: 1=tightened
considerably, 2=tightened somewhat, 3=remained basically unchanged,
4=eased somewhat, 5=eased considerably.)

The extent to which loans are granted to some customers that do not meet
credit scoring thresholds (decreased=tightened; increased=eased)

2.97

2.95

3.00

Other (please specify)

3.00

3.00

0.00

Number of banks responding

31

19

12

25. Over the past three months, how has your bank changed the
following terms and conditions on consumer loans other than credit
card loans? (Please assign each
term a number between 1 and
5 using the following scale: 1=tightened considerably, 2=tightened
somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased
considerably.)

The extent to which loans are granted to some customers that do not meet
credit scoring thresholds (decreased=tightened; increased=eased)

3.00

3.00

3.00

Other (please specify)

3.33

3.00

4.00

Number of banks responding

53

34

19

26. Apart from normal seasonal variation, how has demand for consumer loans
of all types changed over the past three months?

All Respondents

Large Banks

Other Banks

Banks

Percent

Banks

Percent

Banks

Percent

Substantially stronger

0

0.0

0

0.0

0

0.0

Moderately stronger

1

1.9

1

2.9

0

0.0

About the same

28

52.8

16

47.1

12

63.2

Moderately weaker

24

45.3

17

50.0

7

36.8

Substantially weaker

0

0.0

0

0.0

0

0.0

Total

53

100.0

34

100.0

19

100.0

1. The sample is selected from among the largest banks in
each Federal Reserve District. In the table, large banks
are defined as those with total domestic assets of $20
billion or more as of June 30, 2006. The combined assets
of the 36 large banks totaled $4.88 trillion, compared to
$5.08 trillion for the entire panel of 55 banks, and $8.24
trillion for all domestically chartered, federally insured
commercial banks.